Journeys Hostels, the hostel operator, is looking for 15 to 20 pubs to take on its franchises and add a hostel operation to their business in 2011. The company already operates at four sites in London plus one in Brighton and is looking to expand this year. To take part, operators pay a £12,500 upfront fee for a five-year franchise agreement. There’s a management service fee of 8% of overall turnover, plus a marketing and promotional charge (2% of bed turnover) and a systems fee of 1% of bed turnover (all exclusive of VAT). In return, Journeys said it offers expertise to help add hostel facilities to the venues and to operate the new services, including guidance on regulations and best practice. Help with marketing, training and revenue management is also promised. Total investment, including physical changes to the premises and initial fees, works out at an average of £75,000 per venue, said a spokesman. Venues would need space for at least three bedrooms, he added. The spokesman added: “The more unique the properties the better. We help the licensees maximise the space they have. “The big hostel chains focus on just the big centres and are not interested in rural areas. Journeys is interested in any area. It has to be the sort of places that tourists are likely to visit.” The company claims that under the agreement, franchisees can earn between £35,000 in year-one, based on a 50-bunk offer, rising to £48,000 in year-two and £57,000 in year-three. For a 150 bunk offer, projected earnings are claimed to be £57,000 in year-one, £68,000 in year-two and £97,000 in year-three. Pub operator Charles Graham spent around £125,000 adding 93 rooms to redundant space above the former Rosie O’Grady pub near London Bridge in 2008. Since then turnover at the Admiral Taverns leasehold site, which has been renamed Journey’s Hostel, has trebled to around £360,000, although Graham said it requires a “lot of work” to run. “I’m a back street pub; I didn’t have a lot of passing trade. If it wasn’t for the hostel I would have closed within a year,” he said.